Putin triggers EU energy rethink

Moscow’s annexation of Crimea and support for separatists fighting in eastern Ukraine is driving Europe’s energy policy on everything from natural gas, renewables, energy efficency and electricity to building an EU-wide energy union, the bloc’s energy and climate commissioner told POLITICO.

“The Ukrainian situation has triggered all the alarms in the EU and now security of supply is a main concern that permeates all our policies,” Commissioner Miguel Arias Cañete said in an interview.

Both of the Commission’s energy chiefs, Arias Cañete and energy union vice-president Maroš Šefčovič, have been hunting for new energy supplies, visiting North Africa, Norway, the U.S. and the Caspian region. That doesn’t mean that Russian gas won’t still be a significant energy source, Arias Cañete said, but it does mean that Brussels is keen on changing the rules of the game.

A recent investigation by the Commission’s powerful competition department into Gazprom’s business practices is part of that effort. It is aimed at ensuring the company doesn’t abuse its dominant position in central Europe.

“We want it to be a market-based approach, respecting European rules, that’s why we have the Gazprom case,” said Arias Cañete. The Commission’s efforts to diversify away from Russia are part of a much broader effort aimed at creating a single EU energy market.

Our main consideration is security of supply, diversification of sources.

That has given Arias Cañete a very tight schedule. He plans to submit proposals next month on repairing the EU’s flawed Emissions Trading System. Next year come targets for cutting emissions for those sectors not covered by the ETS like transport and agriculture, followed by new emissions standards for cars. And at the end of this year, the Commission is leading efforts to push through a tough line on cutting greenhouse gases during the Paris climate talks.

“There is going to be a heated debate,” he said of the long list of measures. “My presence in the Parliament will be permanent.”

Side deals

Natural gas will play a major role in that strategy, which means the EU has to secure a safe supply. Arias Cañete estimated that future demand will oscillate around 450 billion cubic meters a year, similar to current use.

“We are in the process of decarbonizing our economy and the cleanest fossil fuel is gas. Gas has a role,” he said.

That means Brussels has to deal with the challenge posed by Russia, but not all member states have been equally cooperative, with some cutting side deals with Moscow. The latest was Greece. Keen to get access to natural gas as well as to the revenues that hosting a pipeline would bring, the Greek and Russian energy ministers signed a preliminary agreement in St. Petersburg last week to build a pipeline leg that connects with the Russian-backed TurkStream pipeline and transport 47 bcm of gas into Southeastern Europe.

According to the agreement, Russia would finance the construction costs. Brussels continues to be skeptical of the scheme, while stressing that any project on EU territory will have to abide by EU energy, environmental and competition rules.

“They can say whatever they like, but we can also finance whatever we like. And our main consideration is security of supply, diversification of sources,” said Arias Cañete. The aim is to ensure that EU regions have access to at least three sources of gas by building or upgrading infrastructure allowing reverse gas flows from other countries as well as attracting imports of liquefied natural gas (LNG).

“A new corridor in that area doesn’t solve our problems of security of supply,” he said.

Brussels is revisiting existing gas supply rules. Stress tests conducted last year, just as EU-Russia relations were unravelling over the conflict in Ukraine, showed the bloc’s eastern and southeastern members were most exposed to supply shocks.

One way to make them more secure is by taking a look inside the secretive gas contracts between Russia and Central European countries, termed inter-governmental agreements (IGAs). The goal is to “make them comply with European rules in advance.”

The Commission also wants more information on commercial contracts between Gazprom and EU gas companies and so-called strike out clauses that limit the right to resell gas to other buyers or breach EU rules forbidding gas companies from also controlling pipelines.

While some countries, like Poland, would like Brussels to play a larger role in the bloc’s gas dealings, others like Germany and Hungary are worried that allowing Commission officials to take a peek at contracts could reveal confidential commercial information.

The Commission is aware that the area is very politically sensitive.

Political toolbox

“It’s not an easy topic and in that way we’re very prudent,” said Arias Cañete. “We will preserve confidentiality.”

“We’re looking at reverse flows, we’re looking at the nature of contracts,” he added. And that’s why the Commission wants to know IGAs in advance and have information in terms of security of supply in the contracts, to be able in a situation of crisis to know which are the amounts committed to be delivered, which are delivery points, which are capacity at the interconnection, what are our possibilities.”

The final goal is to remove gas as a political weapon wielded by Moscow.

“We have seen that gas has been used as a political tool, and not as a commercial commodity,” said Arias Cañete.

Gas supply by Russia has been extremely reliable from the heights of the cold war by now. However the EU needs this myth in order to pay for its “Energy NATO”, which has nothing to do with markets but everything with (ab)use of market power by cornering the supply side.
Source:http://www.spiegel.de/international/europe/a-1005004.html
“His most important project is the plan for an “energy NATO,” in which the EU and other states would form a gas procurement union and provide mutual assistance. He says this would mean that Moscow could no longer divide the community by turning off the tap for certain countries. ”

Of course or “neocon light” Tusk omits to mention that the tap had been turned on Ukraine after it failed to pay its bills and siphoning of gas intended for down stream customers. Quite clearly Tusk with his “Energy NATO” is echoing Clinton’s language of an “Economic NATO” for TTIP.

A revived NATO combined with TTIP is to lead to a US/EU military economic alliance not intent on economic cooperation and convergence but away from that intent on using power:
“Although EU and US officials generally use the diplomatically correct language of ‘convergence’, TTIP’s logic is soundly based on the Clintonian view of an emerging ‘economic NATO’, competing – rather than converging – with a rising Asia.”
Source:http://www.clingendael.nl/publication/geopolitics-ttip

So its is not about using gas as a political weapon by Russia but by the EU itself.

Posted on 6/25/15 | 8:39 AM CEST

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